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August 15, 2014

Ebolanomics

The colourful plastic buckets are stacked up to three high in front of shopfronts and stalls on almost every street. They are selling faster than suppliers can provide them. Along with disinfecting chlorine tablets, these buckets symbolise  the only protection for many in Monrovia, capital of Liberia, against the terrifying possibility of infection by Ebola.

But not everyone can afford them. The rapidly escalating prices of the buckets and tablets – which in some areas have more than doubled in price since the start of the crisis – have led to numerous accusations of predatory traders profiting from the crisis. Traders’ groups retort that it is the tightening of foreign imports – also driven by the crisis – that is reducing supply and leading to rapid inflation.

The Ebola epidemic started in Guinea in December 2013, and has now spread to 4 West African countries (see map). The three most affected countries – Guinea, Liberia and Sierra Leone – are characterised by weak healthcare systems and poor infrastructure. Health budgets are low and funded almost entirely by foreign aid. Sierra Leone has less than 200 doctors in the public health system for a population of over 6 million. The heroic Dr Sheik Umar Khan, who died last month of Ebola after having treated over 100 patients, was the only virologist in the entire country. Liberia has 250 doctors for a population of 4 million. Guinea has just 1 doctor per 10,000 people – the worldwide average is 13 per 10,000. MSF, who have played a leading role in the response to date, last week called for the radical scaling up of ‘medical care, training of health staff, infection control, contact tracing, epidemiological surveillance, alert and referral systems, community mobilisation and education.’ But it is clear that this is more than a public health crisis – the economic impacts of Ebola are becoming all too apparent.

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The spread of Ebola, UNOCHA map, 31 July 2014

Spikes in the prices of essential goods are just a starting point. Schools, banks, markets and sports stadiums are being closed across the three most affected countries. In many places the army has been called in to keep the peace, maintain roadblocks and secure containment areas – this is also impacting local economies and livelihoods. Mistrust of institutions – domestic and international, public and private – is running at fever pitch.

On a larger scale, the economic kickbacks give even more cause for concern. Cross-border trade, a necessity for many West African countries, is slowing. Many land crossings between the countries have been closed. Agriculture is suffering, with many workers fleeing rural areas for fear of the virus, heightening the risk of Ebola spreading more rapidly to sprawling urban centres.

Foreign direct investment is being eroded: numerous commercial projects are being scaled back, and some key industries have started to evacuate their expatriate staff. In Liberia, with 15% of its GDP generated by mining and extractive industries, will be hit especially hard by the recall of all non-essential staff by numerous Western firms.

Last week, two major airlines – British Airways and Emirates – announced that they were cancelling flights to various affected countries for the whole of August. Amid further regional flight cancellations, US ambassadors being recalled home, and complete travel bans by Ghana and Zambia, international visitor numbers are falling dramatically.

None of this is good for already vulnerable economies. Amara Konneh, Minister of Finance of Liberia, summarised the situation facing his country:

This economic threat is so great is because of the controls needed to fight the disease. Save for the two airports remaining open in Liberia, our borders have been closed, schools and markets shut, the movement of people restricted, affected areas quarantined, and troops stationed on the streets. All of this means a virtual economic standstill.”

Ebola has spread so quickly because of the disastrous combination of inadequate capacity and fragile health systems in countries afflicted by decades of conflict, weak economies, entrenched poverty, and environmental encroachment. An effective response will need to take all of these factors into account: not treating Ebola solely as a medical emergency, but as a profound and long-term failure of economic and social development.

The four affected countries will not be impacted in the same ways economically. Oil-exporting Nigeria is likely to be relatively well insulated at a macroeconomic level. But the other three countries are much more reliant on agriculture, trade and tourism, and their situation is likely be more critical. In Guinea, the World Bank estimates that GDP growth has fallen by at least 1% as a result of the crisis.

Making matters worse, the affected countries may face a quadruple whammy. They are already facing desperate levels of impoverishment, inadequate disease responses and the raft of economic effects described above. On top of this, essential aid programmes are being adjusted, discontinued or slowed in the face of the crisis. Last week, UNDP’s Africa chief announced that the Ebola outbreak could lead to development programmes being interrupted in precisely those areas that need them most. The international NGO, CARE, has also said the epidemic is constraining some of their most important work in the region. The US Peace Corps has pulled all staff from affected countries, while the Red Cross has been forced, temporarily, to suspend operations in Guinea. Ongoing efforts are becoming focused on, and over-stretched by Ebola. This creates the very real risk that the biggest problems in the affected countries – everything from diseases such as diarrhoea, malaria and respiratory infections to malnutrition and food insecurity – may get much worse.

Clearly, the impact of Ebola goes much further than the fatality numbers that are being widely reported and frenetically updated in the press. The deaths from Ebola are a tragedy, but they are just the beginning. They should be viewed as the centre of an ever-widening circle of impacts that are already apparent in the social and economic fabric of life in the most affected countries. And it is those who are already most vulnerable who will be most affected by the resulting ‘economic standstill’.

As the crisis unfolds, and panicked, irrational, responses accumulate, the underlying epidemic may get worse, not better. Evidence from many other epidemics, especially avian influenza, suggests that reactions that threaten livelihoods make it more likely that new and emerging cases will go unreported. This can leave the disease to continue to spread unchecked. That kneejerk reactions are counterproductive,  and could well be contributing to a nightmare scenario, should not be a complete surprise. A wildfire analogy is often used by epidemiologists to describe disease spread: in this case, some parts of the international response are attempting to put out the flames of Ebola by dousing them with petrol.

There is cause for hope. The World Bank announced $200m last week in support to the emergency effort being led by the WHO. This is initially being earmarked for paying medics, public information campaigns and strengthening security. Over time, though, the focus of the Bank/WHO strategy will shift toward economic recovery efforts, to help the affected countries back on a path to development and growth. As the World Bank’s Vice President for Africa, Makhtar Diop, has put it:

We will build up safety net protection measures for families and communities in the affected countries in light of the further hardship we expect Ebola will create for people who were already poor and vulnerable to begin with. They face the prospect of losing breadwinners and widespread disruption of their livelihoods which is why over and above containing the spread of the epidemic we also must help people in West Africa cope with its impact on their lives.”

Not doing so would be tantamount to dealing with the symptoms, and not the causes, of this terrible disease.

But we shouldn’t expect this investment alone to solve the problem, nor for it to do so overnight. It took four decades from its discovery by Western scientists to the rise of Ebola as a genuine pandemic threat. It may take at least as long to untangle and smooth out the complex knot of conflict, entrenched poverty, socio-economic vulnerabilities and ecological changes that drove its emergence.

With thanks to Emma Jayne Jones and Alanna Shaikh.

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About Ben Ramalingam

I am a researcher and writer specialising on international development and humanitarian issues. I am currently working on a number of consulting and advisory assignments for international agencies. I am also writing a book on complexity sciences and international aid which will be published by Oxford University Press. I hold Senior Research Associate and Visiting Fellow positions at the Institute of Development Studies, the Overseas Development Institute, and the London School of Economics.

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